HAPPY NEW INVESTMENT DECADE

There is an exceptionally intersting article in Forbes India magzine about the investment scenerio,outlook ,strategy in 2010 and for future in general.. A must read for anyone who is serious about investing..

Key Highlights:

1.History has shown that economic disasters are often followed by a quick recovery, and then, a slower, less dramatic but more devastating crisis.in 1929 and 1978.. Is the same going to happen in 2010 ? considering the present rally with no substantial reason.. I would think so...

2.For the investor, the choice is clear. Putting your money behind a growth of 7 percent a year seems to be a low-risk bet. The growth could be much higher if you pick the right asset classes and the right securities to play them. The payoff might take three to five years to come, but is sure to be as big as the fuel tank of a Hero Honda motorcycle.
If you fill it, shut it and forget it, you won’t have to be scared of 2010.



Have a look at this article

What is FPO(Follow-on Public Offer)

What is FPO?
A Follow-on Public Offer (FPO) is also called further public offer. When a listed company comes out with a fresh issue of shares or makes an offer for sale to the public to raise funds it is known as FPO. In other words, FPO is the consequent issue to the public after initial public offering (IPO). The word FPO came into news after the YES Bank announcement to raise Rs 2,000 crore through FPO and debt.

How is it different from an IPO?
As the name suggests initial public offering (IPO) is the first offer for purchase to public. This is a process when an unlisted company raises funds by offering its shares to the public and consequently gets listed on a stock exchange. However, if the same company comes out with another issue to the public, the second issue would be called an FPO. For instance, ICICI Bank was a listed entity but came out with FPO of around Rs 8,750-crore equity shares in July 2007. The issue remained open for subscription between July 19, 2007, and July 22, 2009. Similarly Bharat Earth Movers (BEML), which was listed in National Stock Exchange on November 5, 2003, came out with a public offer of 49 lakh shares in 2007. Shares of BEML were issued at Rs 1,075 after the closure of the FPO.

Under the Fast Track Issues (FTI), a listed company, which meets certain entry norms, can proceed further with FPOs by filling a copy of RHP to regulators. These companies don’t need to file a draft offer document. However, it is mandatory for a private company, which wants to come out with an IPO.

What are the other kinds of issues through which companies raise money?
Apart from IPO and FPO, a company can raise funds through a rights issue and private placement. A rights issue and bonus issue are made to the existing shareholders. However, a rights issue is also a way to raise funds but in a bonus issue new securities are issued to existing shareholders without any consideration.

OPEX & CAPEX..

Heard this terms many times here & there!!and got baffeled as to wat it is??
or went through financials of a stock and could not figure out difference between operational & capital exenditure?? :)

Just a simple explanation is below:

OPEX:
i.e. operating expense, operating expenditure, operational expense, operational expenditure

OPEX is an ongoing cost for running a product, business, or system
CAPEX-- Its counterpart, a capital expenditure (CAPEX), is the cost of developing or providing non-consumable parts for the product or system.

For example, the purchase of a photocopier is the CAPEX, and the annual paper, toner, power and maintenance cost is the OPEX.

this is the money the business spends in order to turn inventory into throughput.

On an income statement, "operating expenses" is the sum of a business's operating expenses for a period of time, such as a month or year.


Operating expenses include :
1.accounting expenses
2.license fees
3.maintenance and repairs
4.advertising
5.supplies
6.attorney fees and legal fees
7.utilities, such as telephone
8insurance
9.property taxes
10.travel and vehicle expenses
11.salary and wages
12.raw materials

Capital expenditures (CAPEX or capex) are expenditures creating future benefits. A capital expenditure is incurred when a business spends money either to buy fixed assets or to add to the value of an existing fixed asset with a useful life that extends beyond the taxable year.

Capex are used by a company to acquire or upgrade physical assets such as equipment, property, or industrial buildings. Capex is commonly found on the Cash Flow Statement as "Investment in Plant Property and Equipment" or something similar in the Investing subsection.

Included in capital expenditures are amounts spent on:
1.acquiring fixed assets
2.fixing problems with an asset that existed prior to acquisition
3.preparing an asset to be used in business
4.legal costs of establishing or maintaining one's right of ownership in a piece of property
5.restoring property or adapting it to a new or different use
6.starting a new business

What caused the Recession??

We hear a lot about recession .. but do we really know how it occurred or What caused it??


Lot of economies are going into recession and trillions of stock values were wiped out. Aside from these, a lot of companies have reduced their earnings with a lot of plant closures and job lay offs.
We often hear the word recession. We’ve watched news that Singapore, Germany, Japan, and New Zealand officially declared recession in their economies. But what is recession? And what caused it?

please find a simple lucid explanation of the same below:


Recession, in economics, is defined as the contraction of an economy’s Gross Domestic Product for at least two consecutive quarters. That means the economy shrank.

We all know that the world’s largest economy is that of the United States. A lot of countries depend on them most especially countries which depend on export products. There’s this popular saying that “when United States sneezes, everybody catches a cold”. This is so true nowadays which is evident in the domino effect of the global financial crisis with a lot of economies caught colds.

What caused the recession? The problem started in the United States with the so-called Subprime Mortgage Crisis. The crisis was triggered by the rise in mortgage delinquencies leading to foreclosure of houses and ultimately a credit crunch leading to a freeze in liquidity.

Wolla... Went above the head.. lets understand this complicated statement in common terms...

Subprime Mortgage are mortgages given to high default risk credit borrowers. A lot of mortgages issued in US are called subprime which means that little or no downpayment was made by the borrowers to buy houses, cars, etc. Some credit were even given to low income families or with bad credit history. Because of the nature of these mortgages, a lot of borrowers defaulted on their loans which led to banks foreclosing securities of these loans including houses, cars, etc.
All these accumulated and led to the “credit squeeze”. There were no more cash available to other borrowers as all these cash were frozen to foreclosed houses with no willing buyers. The tightening of credit led to a slow down of the economy as there were no more loans available to other borrowers which they can probably use as capital in their businesses. Now, this led to a series of events:

Low Demand. Because of the tightening of credit, there was a slow demand of products of these businesses.

Decrease of Profits. Because of low demand, then there was a decrease in profits for these businesses.

Plant Closures. Because of decrease of profits, then companies need to shut down some of their plants to reduce costs. There was also a notable increase in bankruptcy filings.

Job Lay Offs. Because of plant closures and bankruptcy filings, then companies laid off a lot of their employees and unemployment rate rose.

Stock Market Decline. All these series of events led to the rampant fear of stock investors dumping their stocks which led to tremendous wipe outs of stock values.

The United States and other countries are all doing their best to combat this financial crisis by using different strategies including the recent US$700 Billion bail out plan to increase liquidity in the economy. US Treasury is providing millions and billions of loans to ailing companies to sustain this financial crisis and prevent further recessionof other economies.

The current recession have caused some companies to succumb and declare bankruptcy. Two of these companies include Six Flags, the world’s largest theme park and CIT Group, the American commercial and finance company.

What about a more severe type of recession called depression? I did some study specifically on what caused “The Great Depression” in the 1930s.

Robert Kiyosaki's New Book: CONSPIRACY OF the RICH

An amzing book by an amazing author.

What I found most amzing about this book is the sheer audacity by which he is challenging BIG SHOTS like bernanke (Fed) , ridiculing president nixon's policies, even Obama.....

Don't miss to go through it.. A must have to empower you with more financial knowledge and happenings around the world....

CONSPIRACY OF THE RICH:The 8 new rules of money.

Its not a GOLD BUBBLE!!!

An article from Forbes states that:

Rational investors are buying gold to hedge against inflation. No speculative mania here.


Gold investors have certainly enjoyed a marvelous year. The price of gold has doubled in the last three years and reached an all-time high in the first week of December 2009. As well as the stock market has done, investment in gold has overperformed the S&P 500 by 10%, and by 34% on a risk-adjusted basis. Is the impressive performance of gold comparable to that of Internet stocks in the 2000s or house prices between 2006 and 2008? Are we experiencing a gold bubble? I do not think so.
Economists assume that the main driver of the price of gold is the stock market. Gold and the stock market have historically been negatively correlated. In 2009, however, this correlation turned positive. The stock market was recovering from the crisis, and gold prices were up because gold is an inflation hedge, and investors--especially governments--were accumulating gold reserves. This extraordinary relationship between the stock market and gold prices is not worrisome because we saw the disarray of most financial markets at the end of 2008; it is just taking time for them to readjust.
If the recovery in stock markets continues, all the money that is now flowing into gold will return to equities. Gold prices will then land softly.
Consequently, the negative correlation between gold and the stock market will be restored, and it will be a great year for stocks, but not for gold.
The second driver of gold prices is the weakness of the U.S. dollar.
Asian economies such as China are challenging the dollar's long-term role as the world's reserve currency by accumulating euro-denominated instruments and gold. This is a pervasive equilibrium happily welcomed by China and the U.S. China is interested in keeping the dollar low so that it can more easily afford its heavy oil bill. China also balances its need for dollar reserves with its reasonable fear of rising inflation in the U.S. by accumulating gold. The U.S. is comfortable with a weaker dollar, which makes its exports cheaper in Europe. For the U.S., this is a perfect equilibrium because the dollar’s premier status guarantees access to foreign capital. The European economies, however, suffer from an overvalued euro, and their own exports to the US are highly priced.
Only a big political event could break this equilibrium. It could all start with oil prices being re-denominated in euros (this was the threat recently made by Venezuelan President Hugo Chavez). China would then replace its dollars with euro reserves, and the trade balance between China and Europe would do the rest: The euro would weaken against the dollar, interest rates in the U.S. would increase, the dollar would appreciate, stock prices would increase and the price of gold would go down. This is unlikely.

It is impossible to say if the stock market or the U.S. dollar most affects the price of gold. It would be a big mistake to interpret the relationship between the U.S. dollar and gold prices in isolation. The global economy is a complex system where all macroeconomic variables such as inflation, bond markets, oil prices, exchange rates, stock prices and commodities are interrelated. The dynamics of this system are completely unpredictable because there can be unexpected shocks of very many different kinds. I hope that we have learned this lesson at least from the 2008 financial crisis.

Is there a gold bubble? If there is one, it is definitely not rational. In a rational bubble, prices deviate from fundamentals because arbitrageurs cannot eliminate mispricing because of a market constraint. This was the case in the housing bubble of the last years, where home prices could not be arbitraged away by short-sellers (naturally, houses cannot be sold short), even though the mispricing had already been identified. The gold market is very liquid, efficient and transparent, and mispricing is easily corrected through gold short positions.
In an irrational bubble, prices of assets increase abnormally because investors ignore intrinsic values. An irrational gold bubble is also unlikely. That gold prices are artificially inflated seems natural because gold is a commodity with a limited supply and it does not have a fundamental value.
Demand for gold in 2009 skyrocketed because of an increase in inflation and because European countries required financing. However, gold trades are dominated by institutional investors and large traders who do not panic easily. As well, China makes the most claims about a gold bubble and is simultaneously accumulating gold reserves, which suggests it has an interest in purchasing cheaper gold. Finally, a bubble is unpredictable by nature and only confirmed ex post.
In the absence of fundamental value, a bubble happens when the price of an asset is extraordinarily high. Whether the current gold price is artificial, only history will tell. The only thing we know for sure is that the price of gold is at a historical maximum, but so was the stock market in 2008, and not as a result of a bubble. Gold is certainly expensive, but it is worth what investors are paying for it.

Wat exactly happened with Financial system in America??

In the USA in 1998, many people decided that real estate was very cheap.
At the same time, Wall Street was making it easier for buyers to get loans.Since most of these loans go to people wanting to buy a house, they come with higher interest rates — even if they’re disguised by low initial rates — and thus higher returns. These mortgages packaged together and bundled into investments, often known as collateralized debt obligations(CDO).

Investors then boosted their returns through leverage. For example they made a $100 million bet with only $1 million of their own money and $99 million in debt(backed by a CDO). If the value of the investment rose to just $101 million, the investors would double their money.

Similarly the American home buyer did the same thing, by putting little money down on new houses. The Fed helped make it all possible, sharply reducing interest rates, to prevent a double-dip recession after the technology bust of 2000, and then keeping them low for several years

All these investments, of course, were highly risky. Higher returns always come with greater risk. People assumed that that the usual rules didn’t apply because home prices nationwide had never fallen before. Based on that idea, prices rose ever higher — so high, that they appeared riduclous when compared with real wages.

Then what happened....

The American home seemed so lucrative and easy money that all the banks in the global financial system ended up owning a piece of it. In a strategy to distribute risk many banks sold complex insurance policies on the mortgage debt. That meant that they would now have to pay up in case the mortgage owner defaults

If that $100 million investment I described above were to lose just $1 million of its value, the investor who put up only $1 million would lose everything.

This is the fear that is crippling the financial market these days. Banks dont seem to think they can lend to each other because no one knows how much a bank is leveraged. Uncertainity is the worst thing for markets so investors are losing confidence. This is bringing down the market.
With so many small investors invested in the market through retirement funds, brokerage accounts this is bound to effect the common man on the street. With a declining net worth and lack of credit it is difficult for the American consumer to purchase products leading to low earnings for non-financial companies.
American markets are caught in this vicious circle and rather than only blaming folks on wall street people must also realize that spending beyond your means always leads to financial trouble.

Understanding food prices

As food prices have suddenly increased so much , that common middle class people like me are feeling the impact now.. There is limit to everything and beyond that one starts feeling that "This is not worth it". I found an intersting article in Financial Express Understanding food prices, although it is old one(2008).

Warren Buffet

In

2002 annual report of Berkshire Hathaway , Warren buffet has given lot of meaningful inputs on lot of financial things especially derivatives....

Following are edited excerpts from the Berkshire Hathaway annual report for 2002.

I view derivatives as time bombs, both for the parties that deal in them and the economic system.Basically these instruments call for money to change hands at some future date, with the amount to bedetermined by one or more reference items, such as interest rates, stock prices, or currency values. Forexample, if you are either long or short an S&P 500 futures contract, you are a party to a very simplederivatives transaction, with your gain or loss derived from movements in the index. Derivatives contractsare of varying duration, running sometimes to 20 or more years, and their value is often tied to severalvariables.Unless derivatives contracts are collateralized or guaranteed, their ultimate value also depends on thecreditworthiness of the counter-parties to them. But before a contract is settled, the counter-parties recordprofits and losses – often huge in amount – in their current earnings statements without so much as apenny changing hands. Reported earnings on derivatives are often wildly overstated. That’s becausetoday’s earnings are in a significant way based on estimates whose inaccuracy may not be exposed formany years.The errors usually reflect the human tendency to take an optimistic view of one’s commitments. But theparties to derivatives also have enormous incentives to cheat in accounting for them. Those who tradederivatives are usually paid, in whole or part, on “earnings” calculated by mark-to-market accounting. Butoften there is no real market, and “mark-to-model” is utilized. This substitution can bring on large-scalemischief. As a general rule, contracts involving multiple reference items and distant settlement datesincrease the opportunities for counter-parties to use fanciful assumptions. The two parties to the contractmight well use differing models allowing both to show substantial profits for many years. In extremecases, mark-to-model degenerates into what I would call mark-to-myth.I can assure you that the marking errors in the derivatives business have not been symmetrical. Almostinvariably, they have favored either the trader who was eyeing a multi-million dollar bonus or the CEOwho wanted to report impressive “earnings” (or both). The bonuses were paid, and the CEO profited fromhis options. Only much later did shareholders learn that the reported earnings were a sham.Another problem about derivatives is that they can exacerbate trouble that a corporation has run into forcompletely unrelated reasons. This pile-on effect occurs because many derivatives contracts require thata company suffering a credit downgrade immediately supply collateral to counter-parties. Imagine thenthat a company is downgraded because of general adversity and that its derivatives instantly kick in withtheir requirement, imposing an unexpected and enormous demand for cash collateral on the company.The need to meet this demand can then throw the company into a liquidity crisis that may, in some cases,trigger still more downgrades. It all becomes a spiral that can lead to a corporate meltdown.Derivatives also create a daisy-chain risk that is akin to the risk run by insurers or reinsurers that lay offmuch of their business with others. In both cases, huge receivables from many counter-parties tend tobuild up over time. A participant may see himself as prudent, believing his large credit exposures to bediversified and therefore not dangerous. However under certain circumstances, an exogenous event thatcauses the receivable from Company A to go bad will also affect those from Companies B through Z.In banking, the recognition of a “linkage” problem was one of the reasons for the formation of the FederalReserve System. Before the Fed was established, the failure of weak banks would sometimes put suddenand unanticipated liquidity demands on previously-strong banks, causing them to fail in turn. The Fed nowinsulates the strong from the troubles of the weak. But there is no central bank assigned to the job ofpreventing the dominoes toppling in insurance or derivatives. In these industries, firms that arefundamentally solid can become troubled simply because of the travails of other firms further down thechain.Many people argue that derivatives reduce systemic problems, in that participants who can’t bear certainrisks are able to transfer them to stronger hands. These people believe that derivatives act to stabilize theeconomy, facilitate trade, and eliminate bumps for individual participants.On a micro level, what they say is often true. I believe, however, that the macro picture is dangerous andgetting more so. Large amounts of risk, particularly credit risk, have become concentrated in the hands ofrelatively few derivatives dealers, who in addition trade extensively with one other. The troubles of onecould quickly infect the others.On top of that, these dealers are owed huge amounts by non-dealer counter-parties. Some of thesecounter-parties, are linked in ways that could cause them to run into a problem because of a single event,such as the implosion of the telecom industry. Linkage, when it suddenly surfaces, can trigger serioussystemic problems.Indeed, in 1998, the leveraged and derivatives-heavy activities of a single hedge fund, Long-Term CapitalManagement, caused the Federal Reserve anxieties so severe that it hastily orchestrated a rescue effort.In later Congressional testimony, Fed officials acknowledged that, had they not intervened, theoutstanding trades of LTCM – a firm unknown to the general public and employing only a few hundredpeople – could well have posed a serious threat to the stability of American markets. In other words, theFed acted because its leaders were fearful of what might have happened to other financial institutionshad the LTCM domino toppled. And this affair, though it paralyzed many parts of the fixed-income marketfor weeks, was far from a worst-case scenario.One of the derivatives instruments that LTCM used was total-return swaps, contracts that facilitate 100%leverage in various markets, including stocks. For example, Party A to a contract, usually a bank, puts upall of the money for the purchase of a stock while Party B, without putting up any capital, agrees that at afuture date it will receive any gain or pay any loss that the bank realizes.Total-return swaps of this type make a joke of margin requirements. Beyond that, other types ofderivatives severely curtail the ability of regulators to curb leverage and generally get their arms aroundthe risk profiles of banks, insurers and other financial institutions. Similarly, even experienced investorsand analysts encounter major problems in analyzing the financial condition of firms that are heavilyinvolved with derivatives contracts.The derivatives genie is now well out of the bottle, and these instruments will almost certainly multiply invariety and number until some event makes their toxicity clear. Central banks and governments have sofar found no effective way to control, or even monitor, the risks posed by these contracts. In my view,derivatives are financial weapons of mass destruction, carrying dangers that, while now latent, arepotentially lethal.

It is so interesting to note that he is writing letters to his shareholders from past 20 years....

MAIN KHUD SE HI VAADE NIBHOUN...!!!

VAADA... PROMISE!!!
Often in life we feel betrayed wen somebody else commits something to us and do not fulfill it...
that pains a lot... and we do not forget that for the rest of our lives...
isn't it??

but have we ever given a thought that how many times have we fulfilled the promise to our own self??
we say ki hum exercise karenge,gym jayenge,fit rahenge, apni skills enhance karenge, life mein zyada focus rahenge, but we ofetn break the promise to ourselves?? and how easily do we forget ourselves for this?? Right!!
agar hum khud se hi vaade nibhayein toh shayad zyada kamyab ho sakte hain...!!!zyada khush rah sakte hain...zyada satisfied...!!!


MAIN KHUD SE HI VAADE NIBHAOUN..
MAIN VO HUN JO CHAHUN VO PAOON..!

As I write this,,, I hope that I will able to do this.... i will be able to fulfill promises to my own self..
May God bless!!

Shares and stocks..

Off late, My interest in this field has been increased..
I still do not have complete faith in its results, but I do believe that if markets ,environment are religiously tracked and analyzed and a constant vigil is there on Ur portfolio, u can earn some good amount provided u have invested with a long term goal in mind not a short term...
ofcourse i hv just started and there is along way to go..before I could say that I really know smething about this field...
but really ..a new found passion in ur life..do remove the boredome and monotonous feeling which arises out of repeated daily chores..

(Read.. sleeping.eating,cooking,going to office etc)

Re-Inventing my blog

I m a lazy blogger.. actually I cannot say myself as as blogger... considering nothing substantial has been added to this blog from a long time.....
But suddenly
A thought came across my mind...y not jot down some of the many things that keeps on going across my mind.. This ways at least I can keep track of my own thoughts to some extent.
No doubt,blog is a wonderful and powerful medium..
Today as the times r changing and many big personalities like Mr.Amitabh Bachan, many big shots like yogesh chabaria,
ajay shah and amit agrawal kind of people r blogging to address a large group of people . So can i use this blog to at least address MYSELF.
Hence,I hv decided that I will try to write down some of the thoughts in my mind as and wen i get time to do so.
Hoping to succeed... :)

A TRIBUTE TO THOSE SOULS...

I feel sad wen I remeber some of those people who where a part of my extended enviornmnt. With whomI worked and who sudeenly left this world.
DONT KNOW,Y GOD IS SO CRUEL AT TIMES...the family who this people left behind always feel at unexpressable pain in there hearts....
This blog is my tribute to those souls...
SHIVA-- MY FIRST PROJECT TEAM MATE..USED TO SIT JUST DIAGONALLY TO ME..AN HANDSOME, EVER SMILING AND HELPING TAMILIAN..
PANKAJ-- MY BIT CLASSMATE
AKASH--MY BIT CLASSMATE
MADHAVI-- MY TCS COLLEUGE,FRIENDLY AND SMILING...

THE RIGHT DIRECTIONS

Sometimes I really wonder .....wen I sit still...Very silent ...no sound coming frm anywhere...My mind starts rambling...unexplored indiscreet thoughts starts running through my mind......about past,present and future....!!!
I wonder ..I get astonished about lot of things....Lots of questions are there in my mind whih i feel are unanwered..My minds tries and start searhing .....for those answers....
I wonder as to wat is the purpose of onces life...And whether our lives are meant to have a purpose..Are not we all the puppets of some unknown thread or string which are forcing us to dance on the rythm of destiny....

Destiny did I say destiny..???

So does anything like destiny exist or its all karma....Over the time leading my life I have realized that destiny do exist......But that should not stop us from putting our efforts in the right direction..Yes the direction has to be right and accurate,,then only one can acheive wat he or she really wants in life....But often the problem which I face is that I dont know which is the right direction..I strive to see it..some times I am able to ..some times not...And it goes on.....
Then I realized that there are clues..there are signals everywhere to make u understand that right diection..the correcty path to traverse along......But most often our mind,,,,,clouded by uncertainty ...by our own temptations...inhibitions is not able to see them clearly...and this is where I believe the role and belief in that super power comes into play...There has to be some way out to come out of this illusionary world of ours which each one of us has built around oneself.....One has to be vigilant and cautious not to fall in that trap....to really understand oneself..
I remember wen I was a kid ........I had lot of interest in understanding the behavioral pattern of other people around us...I believe that it will helped me in filtering out the negativity around me and choose the right people to go along with...I still believe the same..But always my father used to say one thing ..that Its gud that u want to cultivate the habbit of differentiating between the right and wrong..But out of all these the most important thing is that .. We all should be able to understand ourself first....once u really know urself is only wen u can really understand the world around u.....becoz the world is nothing but the reflection of our own thoughts... Over the years I have realized that how true he was.....I have to learn to first understand myself..My dreams ..my aspirations..Not short term but long term.....
and I have realized that this process is not easy....Initially lot of trifle goes ,,,the initial inertia I guess....the sooner we overcome it the better...let urself be a silent spectator of all that is happening and slowely u will realize that ur thoughts aren't troubling u anymore...and after that starts the process of unveiling ones own self..I felt that its so difficult to encounter usrelf only sometimes..and we ourself start defending from our own self..justifying to oneself ones wrong actions...
and this process goes on endlessly through out our lives..we dont even realize that this is happening with us....bahout zaroori hai khud ko pehchana..it will help us to gain which will always find lagging in our lives....have we ever thought that y the quest to have sthing never ends..Its becoz we are unaware of that hidden thing which we really want...actually want..........& So our direction is never accurate.... not steady.....
I am striving to understand myself..to choose the right direction....to make the RIGHT CHOICES..WAT ABOUT U....????